Money and credit

CREDIT

MONEY AND CREDIT

                                       MONEY AND CREDIT 

                                                                                                                            How many things can you buy if you were given only 10 rupees? Can you buy a dress for that money? If not, how much money would you require? Why do we use cards instead of money? What are credits? Let us know all about money and credit below.    

 INTRODUCTION

Economics is the study of the circulation of money in the market. In order to understand economics properly, we first need to understand the terms of the subject. Money and credit are two of the most commonly used terms in economics and are quite literally the basis of the entire study. 

                MONEY

we all know money as the paper notes that we use to buy goods and services. But money is much more than that. It is a form of currency that is used in our day to day monetery transactions.Money need not necessarily be in terms of paper notes. 

 "Anything that is generally accepted as a means of exchange and at the same time act as a measure and store of value"  

FORMS OF MONEY

As already mentioned, money comes in several forms, not just the paper currency. Let us find out what are the different forms in which money circulates in the market.

   BANK DEPOSIT 

We do not use all the money that we earn. Bank deposits are one of the most common forms of money, as they are the means by which people save their money. It is always encouraged to deposit money in the bank, as that way the money does not remain stagnant and keeps circulating in the market and the depositor can earn a certain amount of interest. These deposits are also called demand deposits as they are withdraw-able on demand.

CHEQUE

 A cheque is another form of money. At times we do not have cash in our hands, or the transaction is of a heavysum that cannot be given in cash money, in that situation, a person can write a cheque in the name of the bearer. The bearer can present the cheque to the concerned bank and get the money either in cash or have it deposited in his or her bank account. This form of money is attached to your bank deposits. You must have a bank account before you can use a cheque.

                                          CREDIT 

   Credit is a means of lending. People often need money to start a business or pay for college fees and other such huge expenses, which may not be possible to meet in cash and in one go. For such situations there are credits. In credit, you borrow money from the bank to meet your expenses, whether to pay off a college fee, or to pay the vendors for any business supply, or to purchase a new house, or car.

                                                                                                                                                                                               There are four types of credit:

1.   Revolving credit. With revolving credit, you are given a maximum credit limit, and you can make charges up to that limit. Each month, you carry a balance (or revolve the debt) and make a payment. Most credit cards are a form of revolving credit.

2.   Charge cards. While they often look like revolving credit cards and are used in the same way, charge accounts differ in that you must pay the total balance every month.

3.   Service credit. Your agreements with service providers are all credit arrangements. You receive electricity, cellular phone service, gym membership, etc., with the agreement that you will pay for them each month. Not all service accounts are reported in your credit history.

4.   Installment credit. With installment credit, a creditor loans you a specific amount of money, and you agree to repay the money and interest in regular installments of a fixed amount over a set period of time. Car loans and mortgages are two examples of installment credit.

In both the cases, money and credit are circulated in the market generating more money and assisting in development. Therefore it is important to understand the concept of money and credit. It is this money and credit that helps us in improving our economy further.

REFERENCE:https://www.toppr.com/guides/economics/money                         -and-credit/all-about-money-and-credit/

                                                                                                                                     https://www.experian.com/blogs/ask-                                             experian/credit-education/faqs/what is credit/